Statement: Should there be a ceiling on the salaries of top executives of multinational companies operating in the country? Arguments: I. Yes. Otherwise unhealthy competition and comparison will arise and domestic industry may not withstand it. II. No. In a liberalised economy such ceilings are counter productive and disparities reduce as markets mature. Choose the option that best identifies the strong argument(s).

Introduction / Context:
Executive pay regulation involves trade offs among market competitiveness, talent attraction, corporate governance, and equity. Strong arguments must connect the proposal to these objectives with credible mechanism.

Given Data / Assumptions:

• Firms compete globally for managerial talent.
• Corporate governance tools exist beyond pay ceilings.

Concept / Approach:
Judge whether each argument offers a general, policy relevant reason rather than speculative fear.

Step-by-Step Solution:
Argument I: Predicts unhealthy comparison and claims domestic industry will fail. This is speculative and does not show how a ceiling improves governance more effectively than transparency, independent boards, or incentive alignment. Weak.Argument II: Notes ceilings can be counter productive in open markets by driving talent away or to opaque forms of compensation. It proposes that disparities tend to be moderated by competition and disclosure. This is a relevant mechanism based argument. Strong.

Verification / Alternative check:
Stronger regulation typically targets pay structure, disclosure, and performance linkage rather than hard caps.

Why Other Options Are Wrong:
I alone lacks mechanism; either or both overvalue a weak premise; neither ignores the validity in II.

Common Pitfalls:
Assuming pay caps automatically improve equity; ignoring unintended consequences like brain drain.

Final Answer:
Only Argument II is strong.